Re: Legal Opinion regarding Transfer of Liability from Deceased Account to New Account
Please refer to your letter No. ………….. dated 05.02.2001 on the above-mentioned subject.
We have examined the papers/documents that you have referred to us.
The Bank vide Head Office Sanction Letter No. ………….. dated 07.12.99 allowed an overdraft facility of Tk. 40.00 lacs in favour of Mr. X, Proprietor Company 1. The facility was granted against registered mortgage of 10 katha land situated at Sayedabad standing in the name of Mr. Y, father of Mr. X. Mr. X expired on 25.11.2000. Subsequently, the Bank has transferred the liability to past due account and has frozen the interest of that account.
Now, Mr. Y, the mortgagor of the property, has verbally proposed that they want to open a new account in the name of the deceased’s wife/his younger son, who would be the probable proprietor of the new firm. They also want that the total liability of the proprietorship concern be transferred to the new account so that they can start the business again.
In such a situation, the Bank has sought our opinion as to whether the entire liability of the account of the proprietorship concern can be transferred to the proposed new account on the basis of the existing legal mortgage created in favour of the Bank.
The entire liability of the account of deceased Mr. X, Proprietor Company 1 can be transferred to the proposed new account in the name of the deceased’s wife/son on the basis of the existing mortgage in favour of the Bank. However, to transfer the liability the following documents have to be obtained by the Bank:
(i) A Memorandum of Deposit of Title Deeds wherein Mr. Y will confirm creation of mortgage on the properties already mortgaged with the Bank as security of the facilities transferred to the account of the new proprietorship concern.
(ii) A Tripartite Agreement to be executed between the Bank, the Proprietor of the new proprietorship concern and Mr. Y wherein the new proprietor would accept and acknowledge the entire liabilities of the account of Company 1 and Mr. Y would agree that the existing securities executed in favour of the Bank would continue until all the loans of the new proprietorship concern with the Bank is fully adjusted.
If you instruct us, we will provide you with the draft of the above-mentioned documents.
Should you have any query, please do not hesitate to contact the undersigned.
For: “The Lawyers & Jurists”